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Wednesday, Dec. 4, 2013

Walker’s Book Rewrites High-Speed Rail History

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Among the many fibs, distortions, smears and lies of omission in Unintimidated, Gov. Scott Walker’s new autobiography, is his version of the events surrounding the cancellation of $810 million in federal funds to go toward a high-speed rail link between Madison and Milwaukee and, potentially, throughout the Midwest.

According to Walker, “After my election, Governor Doyle canceled the project… It was a major victory. We had saved Wisconsin taxpayers more than $100 million before even taking office.”

Um, what?

Walker had made canceling the high-speed rail project a central part of his 2010 gubernatorial campaign—along with creating 250,000 private sector jobs in his first term, a campaign promise unmentioned in Unintimidated, likely because he will not fulfill it.

And, as a review of the records shows, Walker himself—not Doyle—forced the federal government to pull the $810 million grant, and has exposed state taxpayers to tens of millions of dollars in extra costs.

 

The Life and Death of High-Speed Rail

In Walker’s telling, he knew that the stimulus-funded rail project, like all stimulus projects, was a “classic bait and switch… Once the federal money disappeared, so would the jobs.”

Walker was so opposed to the high-speed rail line that his campaign set up a website, notrain.com, to drum up sentiment against it.

That’s totally at odds with how then-Gov. Jim Doyle, former Republican Gov. Tommy Thompson and Walker’s 2010 opponent, Milwaukee Mayor Tom Barrett, viewed the rail line. Back in the 1990s, Thompson had set in motion the studies of high-speed rail in Wisconsin, which would link to lines throughout the Midwest.

Doyle continued the planning process and was a partner in the Midwest Regional Rail Initiative, a nine-state passenger rail system. When President Obama announced his competition for stimulus funding, Wisconsin submitted its proposal.

Wisconsin won big, earning more than 10% of the $8 billion earmarked nationally for high-speed rail. But the grant wasn’t just for high-speed rail. It included $82 million for local projects, such as upgrades to the Milwaukee-Chicago Amtrak Hiawatha rail line—upgrades that eventually have to be done—new Hiawatha train cars, and for a permanent facility to maintain the new Hiawatha train cars.

Doyle offered contracts to engineering firms and wooed Spanish train manufacturer Talgo to the state. The company chose to set up shop in Milwaukee’s former A.O. Smith site, where an estimated 125 employees would build cars for the high-speed line as well as two 14-car trains for the Hiawatha line—and train cars for other states. The city chipped in $16 million to rehab the site and support the company. Good-paying manufacturing jobs would be created during the Great Recession, and work on the high-speed project was to be completed by January 2013.

But all of that came to a screeching halt with Walker’s November 2010 victory.

Walker vowed to carry through on his campaign promise to kill the rail line although he tried to convince Talgo to stay in Milwaukee despite losing their high-speed rail work.

Doyle, U.S. Department of Transportation Secretary Ray LaHood, a former Republican congressman, and rail supporters tried to convince Walker to keep the project in place.

Walker stuck to his guns, and on Nov. 8, 2010, Doyle announced that he was putting the project “on pause, so that the U.S. DOT and the governor-elect can confer about the future of the high-speed rail project.”

In his official statement on the matter, Doyle said, “To me, it doesn’t make sense not to move ahead, but we have had an election.”

The next day, Walker sent a letter to LaHood saying that he wanted to use the high-speed rail funds for Wisconsin’s roads, highways and bridges. A week later, perhaps sensing how expensive his decision was going to be, Walker floated the idea of using some of the rejected high-speed rail money on the Hiawatha line.

But LaHood took Walker at his word and on Dec. 9, 2010, announced that Wisconsin’s high-speed rail funds would be allocated to 13 other states.

A letter dated that same day from the U.S. DOT to Doyle yanked the funds because Doyle had chosen to suspend the project and noted “the incoming governor’s clear intention not to move forward with the project.”

So much for Walker’s assertion that Doyle rejected the funds—and that Wisconsin, under Walker, would be “open for business.”

 

A Disastrous Financial Decision

Walker alleges in his book that the decision saved Wisconsin taxpayers $110 million in potential cost overruns and ongoing operations. But he seems to have plucked that figure out of thin air and provides no citation for that statement in his book.

Walker estimated that it would cost the state about $10 million annually to operate the high-speed rail line once it was up and running. But more objective experts argued that annual operating costs were closer to $7.5 million—but that the federal government would likely underwrite 90% of those costs, leaving Wisconsin to chip in $750,000 annually. That’s a far cry from Walker’s $110 million estimate. In fact, $110 million adds up to 147 years of operating costs at $750,000 per year. And any smart businessperson or investor would say that leveraging $750,000 annually to bring in $810 million is a bargain.

But the federal funding wasn’t only intended for high-speed rail. The grant included $82 million for upgrades to the Hiawatha line between Chicago and Milwaukee and a new facility to maintain new Hiawatha train sets.

Walker was even trying to secure federal funds for the Hiawatha trains. As recently as March 2011, Walker tried to secure at least $150 million in federal funds for the Hiawatha line—money that he lost when he rejected the $810 million before taking office. That didn’t happen.

 

The Talgo Tangle

Although it wouldn’t build the high-speed train cars because Walker’s Wisconsin wasn’t going to pursue that project, Talgo still had contracts with the state, signed in 2009 during the Doyle years, to build and maintain the new Amtrak Hiawatha train cars at a permanent facility it would set up in Milwaukee. According to Madison attorney Lester Pines, who represents Talgo, the Walker administration encouraged the train maker to continue constructing its cars for the Hiawatha line. Pines told the Shepherd that at the same time the Walker administration was encouraging Talgo to move ahead, the governor was trying to sell the new Hiawatha train cars to other states.   

In June 2011, the Legislature calculated that the state was on the hook for $69.7 million in Amtrak car construction and maintenance costs that would have been covered by the federal stimulus—although Walker administration officials denied that the feds would have made those payments.

In March 2012, apparently at odds with the Walker administration, the Legislature’s Republican-dominated Joint Finance Committee voted to stop funding the construction of Talgo’s new train maintenance base in Milwaukee. That vote more or less shredded the state’s contract with Talgo and cast doubt on the state’s intention to use the $47.5 million Talgo-constructed Hiawatha train cars. 

Not surprisingly, Talgo sued the state in November 2012, alleging that Walker’s Wisconsin defaulted on its contract with the train maker and should be awarded $65.9 million in lost payments and damages.

Talgo CEO Antonio Perez said at the time, “I don’t see how any company would in the future choose to do business with the state of Wisconsin when the state has shown that it cannot be trusted to honor contracts that it signed. Talgo has become the innocent victim of a political agenda.”

The two brand-new, state-of-the-art, high-tech train cars are sitting idle at Talgo’s Century City facility.

Talgo’s attorney Pines said that he thinks the Walker administration is anti-Talgo simply because Doyle was supportive of the company.

“It’s really quite incredible that this has happened,” Pines said. “It’s never happened with any entity that has contracted with the state.”

Walker didn’t mention the Talgo fallout in his book and all of the extra costs incurred to the state.

His aides referred all Unintimidated questions to his publisher, which didn’t respond to the Shepherd’s request to comment.


Correction: In the Nov. 28 issue of the Shepherd, the article “County Board Restores Accountability to Abele’s Budget” incorrectly stated the intent of a $100,000 grant to AIDS Resource Center of Wisconsin. The board had intended the grant for HIV and opiate overdose prevention activities. Milwaukee County Executive Chris Abele vetoed that provision and earmarked the funds for a targeted case management pilot program. The board sustained Abele’s veto 11-7 and his pilot program stayed in the budget.